Shahin, Y; Eid, M S; Ahmed, H and Elhakeem, A (2025) Towards a more stable Construction Joint Venture agreement: individual rationality vs. fairness. International Journal of Construction Management, 25(2), pp. 161-170. ISSN 1562-3599
Abstract
Contractors' decisions are individually rational and not always based on fairness that is needed in collaborative projects, such as Construction Joint Ventures (CJVs). This paper provides a comparative analysis between rational and fair-based sharing in CJVs risk management, along with the commonly used investment-based approach. The analysis is divided into two processes; (1) the contingency cost (CC) calculation process to generate the CCs based on the probabilities and impacts of the project's different risk factors; and (2) the sharing process to allocate the payoff shares to the participating players using three different cooperative game theory (CGT) solution concepts, namely Kernel, Shapley value and τ-value. The analysis is carried out using two illustrative case studies drawn from the literature. The authors mathematically analyzed the stability of the coalition, and evaluated the results through a questionnaire survey held by construction practitioners to offer their perception on the proposed shares. The results show that fair-based approaches resulted in the most stable coalition formation compared to rational-based and investment-based shares. This shows the need to adopt fairness into the decision-making process of contractors in CJVs. Ultimately, this research shall help the decision-makers to craft agreements that stabilize collaborative construction projects.
| Item Type: | Article |
|---|---|
| Uncontrolled Keywords: | construction joint ventures; contingency sharing; cooperative game theory; fairness; risk management; questionnaire |
| Index terms: | risk management, collaborative project, risk factor, fairness, agreements, joint venture, case study, decision-making process, questionnaire, construction project, rationality, construction practitioner, game theory, survey, comparative analysis, stability |
| Subjects: | decision analysis, professional development, contract formation, data analysis and analytics, decision models, data collection methods, risk assessment, business, leadership, environmental hazards, structural engineering, decision-making and reasoning, production management, contractual arrangements |
| Topics: | Information Management, Research Practice, Business Strategy, Contract Administration, Organizational Design, Sustainability, Procurement, Risk Management, Engineering Principles, Project Management |
| Descriptive scope: | 5 PCTEA |
N.B. Descriptive scope is a count of how many of the five facets of empirical research are indicated by the words used in title, abstract and keywords. It is not intended as a judgement on the research; merely a count of the kind of word we would expect to indicate Phenomenon, Concepts, Theoretical framing, Empirical techniques, Analytical techniques. If all five are present, then a code of “5 PCTEA” will indicate this. If you feel the coding for this record is questionable, we welcome discussion around the terms we matched or the way we categorized them. The facet you would expect may not be coded, or a facet may be coded inappropriately. This can also bear on a larger question, of which facets should be treated as defining in construction management research. Please get in touch, and we will look at it. More details here